Computing power to the people

MP3 threatens to do to the Warner Bros. of the world what the PC did to IBM.

IT SEEMS THAT EVERY breakthrough in technology is a retelling of the story of the personal computer, in that it promises to wrest computing power from corporate hands and place it in the hands of the people. In the past few weeks, controversial digitally compressed music files known as MP3s have followed this story line in taking on identities from revolutionary new playback format to topnotch promotional tool to enemy of the recording industry. It all depends on who's doing the judging.

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To consumers, MP3 has proven a serviceable technological breakthrough, allowing music fans to download songs from the Internet with relative ease and speed, and to play them back either on a computer or a portable device known as the Rio. But to record labels big and small, and to the artists they represent, the only thing clear about MP3 is its CD-quality sound.

The five largest record companies and the trade group that represents them, the Recording Industry Association of America, first came out staunchly against MP3 last year, suing the makers of the Rio because they said it encouraged unauthorized use of copyrighted songs (the labels lost). Since then, the companies have backpedaled, although the RIAA maintains a constant vigil against illegal MP3 sites that pop up on the World Wide Web and allow consumers to download music without the permission of artists or record labels.

The RIAA has also worked closely with producers of other types of sound files, like LiquidAudio and AT&T's a2b, to discuss encryption and other ways of preventing bootlegging. But consumers clearly prefer MP3 to formats controlled by the big record companies, and although the RIAA has had some success in cracking down on illegal MP3 Web sites, the files are still widely obtainable through an array of back-door sources.

Todd Sawicki, director of marketing for Seattle's encoding.com, a company that encodes and optimizes video and audio recordings for the Internet, says that the music industry is in a quandary over the technology's possible uses and abuses. "What they're not willing to admit is, 'Shit, we don't know what we're doing yet,'" Sawicki says by phone from Los Angeles, where he's attending a meeting of the Secure Digital Music Initiative, the industry standards group created last month by the RIAA.

What makes matters more confusing—and, from the point of view of the major labels, more alarming—is that individual artists and independent labels are jumping on the MP3 bandwagon daily, using the format to distribute music legally, at no charge or at a competitive price—and legitimizing it in the process. Sub Pop caused a stir last week by announcing that it would offer four songs from albums by artists such as the Pernice Brothers and St. Etienne, available for download at no charge on the label's own Web site and on the MP3.com site. Sub Pop's director of new media and strategic marketing, Kerry Murphy (also a Seattle Weekly contributing writer), is unrepentant about the label's use of the MP3. "We need to promote our bands," she says. "It's not about politics." Murphy adds that Sub Pop has recordings for sale in the Liquid Audio format, at 88 cents per track. Other midsize independent companies such as Massachusetts' Rykodisc and New York's SpinArt have recently begun selling tracks and entire CDs on Goodnoise, a Palo Alto Web company that traffics exclusively—and legally—in MP3. The band They Might Be Giants independently sells downloadable copies of its albums on the site, and at $8.99 apiece they're cheaper than the average retail rate of $14.99.

So if consumers are willing to pay for music downloaded over the Internet, why are major labels like Sony and Warner Bros. worried? The main reason is that the $12 billion-per-year industry hasn't figured out how to cash in on the fledgling commerce; secondarily, the labels fear that artists will forgo the dominant five companies' distribution systems and sell their own songs directly over the Web—essentially cutting Warner Bros. and its ilk out of the loop. Although most people find this scenario either altogether unlikely or far off in time, the concept alone has given the majors a serious case of the jitters. They earn that $12 billion per year, after all, by keeping themselves ensconced between producer and consumer.